halliburton co. v. erica p. john fund - supreme court of the united states · 2 halliburton co. v....

1 (Slip Opinion) OCTOBER TERM 2013

Syllabus

NOTE Where it is feasible a syllabus (headnote) will be released as isbeing done in connection with this case at the time the opinion is issuedThe syllabus constitutes no part of the opinion of the Court but has beenprepared by the Reporter of Decisions for the convenience of the reader See United States v Detroit Timber amp Lumber Co 200 U S 321 337

SUPREME COURT OF THE UNITED STATES

Syllabus

HALLIBURTON CO ET AL v ERICA P JOHN FUND INC FKA ARCHDIOCESE OF MILWAUKEE

SUPPORTING FUND INC

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No 13ndash317 Argued March 5 2014mdashDecided June 23 2014

Investors can recover damages in a private securities fraud action onlyif they prove that they relied on the defendantrsquos misrepresentation indeciding to buy or sell a companyrsquos stock In Basic Inc v Levinson 485 U S 224 this Court held that investors could satisfy this reli-ance requirement by invoking a presumption that the price of stock traded in an efficient market reflects all public material infor-mationmdashincluding material misrepresentations The Court also held however that a defendant could rebut this presumption by showingthat the alleged misrepresentation did not actually affect the stock pricemdashthat is that it had no ldquoprice impactrdquo

Respondent Erica P John Fund Inc (EPJ Fund) filed a putativeclass action against Halliburton and one of its executives (collectively Halliburton) alleging that they made misrepresentations designed toinflate Halliburtonrsquos stock price in violation of section 10(b) of theSecurities Exchange Act of 1934 and Securities and Exchange Com-mission Rule 10bndash5 The District Court initially denied EPJ Fundrsquosclass certification motion and the Fifth Circuit affirmed But this Court vacated that judgment concluding that securities fraud plain-tiffs need not prove loss causationmdasha causal connection between the defendantsrsquo alleged misrepresentations and the plaintiffsrsquo economiclossesmdashat the class certification stage in order to invoke Basicrsquos pre-sumption of reliance On remand Halliburton argued that class cer-tification was nonetheless inappropriate because the evidence it hadearlier introduced to disprove loss causation also showed that its al-leged misrepresentations had not affected its stock price By demon-strating the absence of any ldquoprice impactrdquo Halliburton contended it

2 HALLIBURTON CO v ERICA P JOHN FUND INC

Syllabus

had rebutted the Basic presumption And without the benefit of that presumption investors would have to prove reliance on an individual basis meaning that individual issues would predominate over com-mon ones and class certification would be inappropriate under Fed-eral Rule of Civil Procedure 23(b)(3) The District Court rejected Hal-liburtonrsquos argument and certified the class The Fifth Circuit affirmed concluding that Halliburton could use its price impact evi-dence to rebut the Basic presumption only at trial not at the class certification stage

Held 1 Halliburton has not shown a ldquospecial justificationrdquo Dickerson v

United States 530 U S 428 443 for overruling Basicrsquos presumptionof reliance Pp 4ndash16

(a) To recover damages under section 10(b) and Rule 10bndash5 aplaintiff must prove as relevant here ldquo lsquoreliance upon the misrepre-sentation or omissionrsquo rdquo Amgen Inc v Connecticut Retirement Plans and Trust Funds 568 U S ___ ___ The Court recognized in Basic however that requiring direct proof of reliance from every individualplaintiff ldquowould place an unnecessarily unrealistic evidentiary bur-den on the plaintiff who has traded on an impersonal marketrdquo 485 U S at 245 and ldquoeffectively wouldrdquo prevent plaintiffs ldquofrom pro-ceeding with a class actionrdquo in Rule 10bndash5 suits id at 242 To ad-dress these concerns the Court held that plaintiffs could satisfy thereliance element of a Rule 10bndash5 action by invoking a rebuttable pre-sumption of reliance The Court based that presumption on what is known as the ldquofraud-on-the-marketrdquo theory which holds that ldquothemarket price of shares traded on well-developed markets reflects allpublicly available information and hence any material misrepre-sentationsrdquo Id at 246 The Court also noted that the typical ldquoinves-tor who buys or sells stock at the price set by the market does so inreliance on the integrity of that pricerdquo Id at 247 As a result whenever an investor buys or sells stock at the market price his ldquore-liance on any public material misrepresentations may be pre-sumed for purposes of a Rule 10bndash5 actionrdquo Id at 247 Basic also emphasized that the presumption of reliance was rebuttable rather than conclusive Pp 5ndash7

(b) None of Halliburtonrsquos arguments for overruling Basic so dis-credit the decision as to constitute a ldquospecial justificationrdquo Pp 7ndash12

(1) Halliburton first argues that the Basic presumption is in-consistent with Congressrsquos intent in passing the 1934 Exchange Actmdashthe same argument made by the dissenting Justices in Basic The Basic majority did not find that argument persuasive then and Hal-liburton has given no new reason to endorse it now Pp 7ndash8

(2) Halliburton also contends that Basic rested on two premis-

3 Cite as 573 U S ____ (2014)

Syllabus

es that have been undermined by developments in economic theory First it argues that the Basic Court espoused ldquoa robust view of mar-ket efficiencyrdquo that is no longer tenable in light of empirical evidenceostensibly showing that material public information often is notquickly incorporated into stock prices The Court in Basic acknowl-edged however the debate among economists about the efficiency ofcapital markets and refused to endorse ldquoany particular theory of how quickly and completely publicly available information is reflected inmarket pricerdquo 485 U S at 248 n 28 The Court instead based the presumption of reliance on the fairly modest premise that ldquomarketprofessionals generally consider most publicly announced materialstatements about companies thereby affecting stock market pricesrdquo Id at 247 n 24 Moreover in making the presumption rebuttable Basic recognized that market efficiency is a matter of degree and ac-cordingly made it a matter of proof Halliburton has not identified the kind of fundamental shift in economic theory that could justifyoverruling a precedent on the ground that it misunderstood or has since been overtaken by economic realities

Halliburton also contests the premise that investors ldquoinvest lsquoin re-liance on the integrity of [the market] pricersquo rdquo id at 247 identifying a number of classes of investors for whom ldquoprice integrityrdquo is suppos-edly ldquomarginal or irrelevantrdquo But Basic never denied the existence of such investors who in any event rely at least on the facts thatmarket prices will incorporate public information within a reasonableperiod and that market prices however inaccurate are not distorted by fraud Pp 8ndash12

(c) The principle of stare decisis has ldquo lsquospecial forcersquo rdquo ldquoin respect to statutory interpretationrdquo because ldquo lsquoCongress remains free to alterwhat [the Court has] donersquo rdquo John R Sand amp Gravel Co v United States 552 U S 130 139 So too with Basicrsquos presumption of reli-ance The presumption is not inconsistent with this Courtrsquos more re-cent decisions construing the Rule 10bndash5 cause of action In Central Bank of Denver N A v First Interstate Bank of Denver N A 511 U S 164 and Stoneridge Investment Partners LLC v Scientific-Atlanta Inc 552 U S 148 the Court declined to effectively elimi-nate the reliance element by extending liability to entirely new cate-gories of defendants who themselves had not made any materialpublic misrepresentation The Basic presumption by contrast mere-ly provides an alternative means of satisfying the reliance element Nor is the Basic presumption inconsistent with the Courtrsquos recent de-cisions governing class action certification which require plaintiffs to provemdashnot simply pleadmdashthat their proposed class satisfies each re-quirement of Federal Rule of Civil Procedure 23 including if appli-cable the predominance requirement of Rule 23(b)(3) See eg Wal-


Syllabus

Mart Stores Inc v Dukes 564 U S ___ ___ The Basic presumptiondoes not relieve plaintiffs of that burden but rather sets forth whatplaintiffs must prove to demonstrate predominance Finally Halli-burton emphasizes the possible harmful consequences of the securi-ties class actions facilitated by the Basic presumption but such con-cerns are more appropriately addressed to Congress which has in fact responded to some extent to many of them Pp 12ndash16

2 For the same reasons the Court declines to overrule Basicrsquos pre-sumption of reliance it also declines to modify the prerequisites forinvoking the presumption by requiring plaintiffs to prove ldquoprice im-pactrdquo directly at the class certification stage The Basic presumptionincorporates two constituent presumptions First if a plaintiff showsthat the defendantrsquos misrepresentation was public and material andthat the stock traded in a generally efficient market he is entitled toa presumption that the misrepresentation affected the stock price Second if the plaintiff also shows that he purchased the stock at themarket price during the relevant period he is entitled to a further presumption that he purchased the stock in reliance on the defend-antrsquos misrepresentation Requiring plaintiffs to prove price impactdirectly would take away the first constituent presumption Halli-burtonrsquos argument for doing so is the same as its argument for over-ruling the Basic presumption altogether and it meets the same fate Pp 16ndash18

3 The Court agrees with Halliburton however that defendantsmust be afforded an opportunity to rebut the presumption of reliancebefore class certification with evidence of a lack of price impact De-fendants may already introduce such evidence at the merits stage torebut the Basic presumption as well as at the class certificationstage to counter a plaintiffrsquos showing of market efficiency Forbid-ding defendants to rely on the same evidence prior to class certifica-tion for the particular purpose of rebutting the presumption altogeth-er makes no sense and can readily lead to results that are inconsistent with Basicrsquos own logic Basic allows plaintiffs to estab-lish price impact indirectly by showing that a stock traded in an effi-cient market and that a defendantrsquos misrepresentations were publicand material But an indirect proxy should not preclude considera-tion of a defendantrsquos direct more salient evidence showing that an al-leged misrepresentation did not actually affect the stockrsquos price andconsequently that the Basic presumption does not apply Amgen does not require a different result There the Court held that mate-riality though a prerequisite for invoking the Basic presumptionshould be left to the merits stage because it does not bear on the pre-dominance requirement of Rule 23(b)(3) In contrast the fact that a misrepresentation has price impact is ldquoBasicrsquos fundamental premiserdquo

5 Cite as 573 U S ____ (2014)

Syllabus

Erica P John Fund Inc v Halliburton Co 563 U S ___ ___ It thus has everything to do with the issue of predominance at the class certification stage That is why if reliance is to be shown through the Basic presumption the publicity and market efficiency prerequi-sites must be proved before class certification Given that such indi-rect evidence of price impact will be before the court at the class certi-fication stage in any event there is no reason to artificially limit theinquiry at that stage by excluding direct evidence of price impactPp 18ndash23

718 F 3d 423 vacated and remanded

ROBERTS C J delivered the opinion of the Court in which KENNEDY GINSBURG BREYER SOTOMAYOR and KAGAN JJ joined GINSBURG J filed a concurring opinion in which BREYER and SOTOMAYOR JJ joined THOMAS J filed an opinion concurring in the judgment in which SCALIA and ALITO JJ joined

_________________

_________________

1 Cite as 573 U S ____ (2014)

Opinion of the Court

NOTICE This opinion is subject to formal revision before publication in thepreliminary print of the United States Reports Readers are requested tonotify the Reporter of Decisions Supreme Court of the United States Wash-ington D C 20543 of any typographical or other formal errors in orderthat corrections may be made before the preliminary print goes to press


No 13ndash317

HALLIBURTON CO ET AL PETITIONERS v ERICA P JOHN FUND INC FKA ARCHDIOCESE OF MILWAUKEE SUPPORTING FUND INC

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

[June 23 2014]

CHIEF JUSTICE ROBERTS delivered the opinion of the Court

Investors can recover damages in a private securitiesfraud action only if they prove that they relied on the defendantrsquos misrepresentation in deciding to buy or sell acompanyrsquos stock In Basic Inc v Levinson 485 U S 224 (1988) we held that investors could satisfy this reliancerequirement by invoking a presumption that the price of stock traded in an efficient market reflects all public material informationmdashincluding material misstatementsIn such a case we concluded anyone who buys or sells thestock at the market price may be considered to have reliedon those misstatements

We also held however that a defendant could rebut this presumption in a number of ways including by showing that the alleged misrepresentation did not actually affectthe stockrsquos pricemdashthat is that the misrepresentation had no ldquoprice impactrdquo The questions presented are whether we should overrule or modify Basicrsquos presumption of reli-ance and if not whether defendants should nonetheless



be afforded an opportunity in securities class action casesto rebut the presumption at the class certification stage by showing a lack of price impact

I Respondent Erica P John Fund Inc (EPJ Fund) is the

lead plaintiff in a putative class action against Halliburtonand one of its executives (collectively Halliburton) allegingviolations of section 10(b) of the Securities Exchange Actof 1934 48 Stat 891 15 U S C sect78j(b) and Securitiesand Exchange Commission Rule 10bndash5 17 CFR sect24010bndash5(2013) According to EPJ Fund between June 3 1999 and December 7 2001 Halliburton made a series of mis-representations regarding its potential liability in asbestoslitigation its expected revenue from certain constructioncontracts and the anticipated benefits of its merger withanother companymdashall in an attempt to inflate the price ofits stock Halliburton subsequently made a number of corrective disclosures which EPJ Fund contends caused the companyrsquos stock price to drop and investors to lose money

EPJ Fund moved to certify a class comprising all inves-tors who purchased Halliburton common stock during the class period The District Court found that the proposedclass satisfied all the threshold requirements of Federal Rule of Civil Procedure 23(a) It was sufficiently numer-ous there were common questions of law or fact the rep-resentative partiesrsquo claims were typical of the class claimsand the representatives could fairly and adequately pro-tect the interests of the class App to Pet for Cert 54aAnd except for one difficulty the court would have also concluded that the class satisfied the requirement of Rule23(b)(3) that ldquothe questions of law or fact common to classmembers predominate over any questions affecting onlyindividual membersrdquo See id at 55a 98a The difficulty was that Circuit precedent required securities fraud plain-

3 Cite as 573 U S ____ (2014)


tiffs to prove ldquoloss causationrdquomdasha causal connection be-tween the defendantsrsquo alleged misrepresentations and theplaintiffsrsquo economic lossesmdashin order to invoke Basicrsquos presumption of reliance and obtain class certification App to Pet for Cert 55a and n 2 Because EPJ Fund had not demonstrated such a connection for any of Halli-burtonrsquos alleged misrepresentations the District Courtrefused to certify the proposed class Id at 55a 98a The United States Court of Appeals for the Fifth Circuit af-firmed the denial of class certification on the same ground Archdiocese of Milwaukee Supporting Fund Inc v Halli-burton Co 597 F 3d 330 (2010)

We granted certiorari and vacated the judgment findingnothing in ldquoBasic or its logicrdquo to justify the Fifth Circuitrsquos requirement that securities fraud plaintiffs prove losscausation at the class certification stage in order to invoke Basicrsquos presumption of reliance Erica P John Fund Inc v Halliburton Co 563 U S ___ ___ (2011) (Halliburton I ) (slip op at 6) ldquoLoss causationrdquo we explained ldquoad-dresses a matter different from whether an investor relied on a misrepresentation presumptively or otherwise when buying or selling a stockrdquo Ibid We remanded the case for the lower courts to consider ldquoany further arguments against class certificationrdquo that Halliburton had preserved Id at ___ (slip op at 9)

On remand Halliburton argued that class certification was inappropriate because the evidence it had earlier introduced to disprove loss causation also showed thatnone of its alleged misrepresentations had actually affected its stock price By demonstrating the absence of any ldquoprice impactrdquo Halliburton contended it had rebutted Basicrsquos presumption that the members of the proposedclass had relied on its alleged misrepresentations simply by buying or selling its stock at the market price And without the benefit of the Basic presumption investorswould have to prove reliance on an individual basis mean-



ing that individual issues would predominate over com-mon ones The District Court declined to consider Halli-burtonrsquos argument holding that the Basic presumptionapplied and certifying the class under Rule 23(b)(3) Appto Pet for Cert 30a

The Fifth Circuit affirmed 718 F 3d 423 (2013) The court found that Halliburton had preserved its price im-pact argument but to no avail Id at 435ndash436 While acknowledging that ldquoHalliburtonrsquos price impact evidencecould be used at the trial on the merits to refute the pre-sumption of reliancerdquo id at 433 the court held that Halliburton could not use such evidence for that purpose at the class certification stage id at 435 ldquo[P]rice impact evidencerdquo the court explained ldquodoes not bear on the ques-tion of common question predominance [under Rule 23(b)(3)] and is thus appropriately considered only on the merits after the class has been certifiedrdquo Ibid

We once again granted certiorari 571 U S ___ (2013) this time to resolve a conflict among the Circuits over whether securities fraud defendants may attempt to rebutthe Basic presumption at the class certification stage withevidence of a lack of price impact We also accepted Halli-burtonrsquos invitation to reconsider the presumption of reli-ance for securities fraud claims that we adopted in Basic

II Halliburton urges us to overrule Basicrsquos presumption of

reliance and to instead require every securities fraudplaintiff to prove that he actually relied on the defendantrsquos misrepresentation in deciding to buy or sell a companyrsquosstock Before overturning a long-settled precedent how-ever we require ldquospecial justificationrdquo not just an argu-ment that the precedent was wrongly decided Dickerson v United States 530 U S 428 443 (2000) (internal quota-tion marks omitted) Halliburton has failed to make that showing

5 Cite as 573 U S ____ (2014)


A Section 10(b) of the Securities Exchange Act of 1934 and

the Securities and Exchange Commissionrsquos Rule 10bndash5prohibit making any material misstatement or omission inconnection with the purchase or sale of any security Although section 10(b) does not create an express privatecause of action we have long recognized an implied pri-vate cause of action to enforce the provision and its im-plementing regulation See Blue Chip Stamps v Manor Drug Stores 421 U S 723 730 (1975) To recover damagesfor violations of section 10(b) and Rule 10bndash5 a plaintiff must prove ldquo lsquo(1) a material misrepresentation or omissionby the defendant (2) scienter (3) a connection between themisrepresentation or omission and the purchase or sale of a security (4) reliance upon the misrepresentation oromission (5) economic loss and (6) loss causationrsquo rdquo Amgen Inc v Connecticut Retirement Plans and Trust Funds 568 U S ___ ___ (2013) (slip op at 3ndash4) (quoting Matrixx Initiatives Inc v Siracusano 563 U S ___ ___ (2011) (slip op at 9))

The reliance element ldquo lsquoensures that there is a properconnection between a defendantrsquos misrepresentation and aplaintiff rsquos injuryrsquo rdquo 568 U S at ___ (slip op at 4) (quot-ing Halliburton I 563 U S at ___ (slip op at 4)) ldquoThe traditional (and most direct) way a plaintiff can demon-strate reliance is by showing that he was aware of a com-panyrsquos statement and engaged in a relevant transactionmdash eg purchasing common stockmdashbased on that specific misrepresentationrdquo Id at ___ (slip op at 4)

In Basic however we recognized that requiring suchdirect proof of reliance ldquowould place an unnecessarilyunrealistic evidentiary burden on the Rule 10bndash5 plaintiffwho has traded on an impersonal marketrdquo 485 U S at 245 That is because even assuming an investor could prove that he was aware of the misrepresentation he would still have to ldquoshow a speculative state of facts ie



how he would have acted if the misrepresentation had not been maderdquo Ibid

We also noted that ldquo[r]equiring proof of individualized reliancerdquo from every securities fraud plaintiff ldquoeffectively would prevent[ ] [plaintiffs] from proceeding with aclass actionrdquo in Rule 10bndash5 suits Id at 242 If everyplaintiff had to prove direct reliance on the defendantrsquosmisrepresentation ldquoindividual issues then would overwhelm[ ] the common onesrdquo making certification under Rule 23(b)(3) inappropriate Ibid

To address these concerns Basic held that securities fraud plaintiffs can in certain circumstances satisfy thereliance element of a Rule 10bndash5 action by invoking a rebuttable presumption of reliance rather than proving direct reliance on a misrepresentation The Court based that presumption on what is known as the ldquofraud-on-the-marketrdquo theory which holds that ldquothe market price ofshares traded on well-developed markets reflects all pub-licly available information and hence any material mis-representationsrdquo Id at 246 The Court also noted that rather than scrutinize every piece of public information about a company for himself the typical ldquoinvestor whobuys or sells stock at the price set by the market does so in reliance on the integrity of that pricerdquomdashthe belief that it reflects all public material information Id at 247 As a result whenever the investor buys or sells stock at the market price his ldquoreliance on any public material misrep-resentations may be presumed for purposes of a Rule10bndash5 actionrdquo Ibid

Based on this theory a plaintiff must make the follow-ing showings to demonstrate that the presumption ofreliance applies in a given case (1) that the alleged mis-representations were publicly known (2) that they were material (3) that the stock traded in an efficient marketand (4) that the plaintiff traded the stock between thetime the misrepresentations were made and when the

7 Cite as 573 U S ____ (2014)


truth was revealed See id at 248 n 27 Halliburton I supra at ___ (slip op at 5ndash6)

At the same time Basic emphasized that the presump-tion of reliance was rebuttable rather than conclusive Specifically ldquo[a]ny showing that severs the link between the alleged misrepresentation and either the price re-ceived (or paid) by the plaintiff or his decision to trade at a fair market price will be sufficient to rebut the pre-sumption of reliancerdquo 485 U S at 248 So for example ifa defendant could show that the alleged misrepresentationdid not for whatever reason actually affect the marketprice or that a plaintiff would have bought or sold the stock even had he been aware that the stockrsquos price wastainted by fraud then the presumption of reliance wouldnot apply Id at 248ndash249 In either of those cases a plaintiff would have to prove that he directly relied on the defendantrsquos misrepresentation in buying or selling thestock

B Halliburton contends that securities fraud plaintiffs

should always have to prove direct reliance and that the Basic Court erred in allowing them to invoke a presump-tion of reliance instead According to Halliburton the Basic presumption contravenes congressional intent and has been undermined by subsequent developments ineconomic theory Neither argument however so discred-its Basic as to constitute ldquospecial justificationrdquo for overrul-ing the decision

1 Halliburton first argues that the Basic presumption is

inconsistent with Congressrsquos intent in passing the 1934Exchange Act Because ldquo[t]he Section 10(b) action is alsquojudicial construct that Congress did not enactrsquo rdquo thisCourt Halliburton insists ldquomust identifymdashand borrow



frommdashthe express provision that is lsquomost analogous to the private 10bndash5 right of actionrsquo rdquo Brief for Petitioners 12 (quoting Stoneridge Investment Partners LLC v Scientific-Atlanta Inc 552 U S 148 164 (2008) Musick Peeler amp Garrett v Employers Ins of Wausau 508 U S 286 294 (1993)) According to Halliburton the closest analogueto section 10(b) is section 18(a) of the Act which cre-ates an express private cause of action allowing investors to recover damages based on misrepresentationsmade in certain regulatory filings 15 U S C sect78r(a) That provision requires an investor to prove that he bought or sold stock ldquoin reliance uponrdquo the defendantrsquosmisrepresentation Ibid In ignoring this direct reliancerequirement the argument goes the Basic Court relieved Rule 10bndash5 plaintiffs of a burden that Congress would have imposed had it created the cause of action

EPJ Fund contests both premises of Halliburtonrsquos ar-gument arguing that Congress has affirmed Basicrsquos con-struction of section 10(b) and that in any event the clos-est analogue to section 10(b) is not section 18(a) butsection 9 15 U S C sect78imdasha provision that does not re-quire actual reliance

We need not settle this dispute In Basic the dissenting Justices made the same argument based on section 18(a) that Halliburton presses here See 485 U S at 257ndash258 (White J concurring in part and dissenting in part) The Basic majority did not find that argument persuasive then and Halliburton has given us no new reason to endorse it now

2 Halliburtonrsquos primary argument for overruling Basic is

that the decision rested on two premises that can no longerwithstand scrutiny The first premise concerns what is known as the ldquoefficient capital markets hypothesisrdquo Basic stated that ldquothe market price of shares traded on well-

9 Cite as 573 U S ____ (2014)


developed markets reflects all publicly available infor-mation and hence any material misrepresentationsrdquo Id at 246 From that statement Halliburton concludes that the Basic Court espoused ldquoa robust view of market efficiencyrdquo that is no longer tenable for ldquo lsquooverwhelming empirical evidencersquo now lsquosuggests that capital markets are not fundamentally efficientrsquo rdquo Brief for Petitioners 14ndash16 (quoting Lev amp de Villiers Stock Price Crashes and 10bndash5Damages A Legal Economic and Policy Analysis 47Stan L Rev 7 20 (1994)) To support this contentionHalliburton cites studies purporting to show that ldquopublicinformation is often not incorporated immediately (muchless rationally) into market pricesrdquo Brief for Petitioners 17 see id at 16ndash20 See also Brief for Law Professors as Amici Curiae 15ndash18

Halliburton does not of course maintain that capitalmarkets are always inefficient Rather in its view Basicrsquos fundamental error was to ignore the fact that ldquo lsquoefficiencyis not a binary yes or no questionrsquo rdquo Brief for Petitioners 20 (quoting Langevoort Basic at Twenty Rethinking Fraud on the Market 2009 Wis L Rev 151 167)) The markets for some securities are more efficient than the markets for others and even a single market can process different kinds of information more or less efficiently depending on how widely the information is disseminatedand how easily it is understood Brief for Petitioners at 20ndash21 Yet Basic Halliburton asserts glossed over these nuances assuming a false dichotomy that renders thepresumption of reliance both underinclusive and overin-clusive A misrepresentation can distort a stockrsquos market price even in a generally inefficient market and a misrep-resentation can leave a stockrsquos market price unaffectedeven in a generally efficient one Brief for Petitioners at 21

Halliburtonrsquos criticisms fail to take Basic on its own terms Halliburton focuses on the debate among econo-



mists about the degree to which the market price of a companyrsquos stock reflects public information about thecompanymdashand thus the degree to which an investor can earn an abnormal above-market return by trading on such information See Brief for Financial Economists as Amici Curiae 4ndash10 (describing the debate) That debate is not new Indeed the Basic Court acknowledged it and declined to enter the fray declaring that ldquo[w]e need notdetermine by adjudication what economists and social scientists have debated through the use of sophisticated statistical analysis and the application of economic theoryrdquo 485 U S at 246ndash247 n 24 To recognize the pre-sumption of reliance the Court explained was not ldquocon-clusively to adopt any particular theory of how quickly andcompletely publicly available information is reflected in market pricerdquo Id at 248 n 28 The Court instead based the presumption on the fairly modest premise that ldquomar-ket professionals generally consider most publicly an-nounced material statements about companies thereby affecting stock market pricesrdquo Id at 247 n 24 Basicrsquos presumption of reliance thus does not rest on a ldquobinaryrdquo view of market efficiency Indeed in making the pre-sumption rebuttable Basic recognized that market effi-ciency is a matter of degree and accordingly made it amatter of proof

The academic debates discussed by Halliburton have notrefuted the modest premise underlying the presumption of reliance Even the foremost critics of the efficient-capital-markets hypothesis acknowledge that public information generally affects stock prices See eg Shiller Wersquoll Share the Honors and Agree to Disagree N Y Times Oct 27 2013 p BU6 (ldquoOf course prices reflect availableinformationrdquo) Halliburton also conceded as much in its reply brief and at oral argument See Reply Brief 13(ldquomarket prices generally respond to new material infor-mationrdquo) Tr of Oral Arg 7 Debates about the precise

11 Cite as 573 U S ____ (2014)


degree to which stock prices accurately reflect public in-formation are thus largely beside the point ldquoThat the price [of a stock] may be inaccurate does not detract fromthe fact that false statements affect it and cause lossrdquo which is ldquoall that Basic requiresrdquo Schleicher v Wendt 618 F 3d 679 685 (CA7 2010) (Easterbrook C J) Even though the efficient capital markets hypothesis may haveldquogarnered substantial criticism since Basicrdquo post at 6 (THOMAS J concurring in judgment) Halliburton has notidentified the kind of fundamental shift in economic theory that could justify overruling a precedent on the ground that it misunderstood or has since been overtaken byeconomic realities Contrast State Oil Co v Khan 522 U S 3 (1997) unanimously overruling Albrecht v Herald Co 390 U S 145 (1968)

Halliburton also contests a second premise underlying the Basic presumption the notion that investors ldquoinvest lsquoin reliance on the integrity of [the market] pricersquo rdquo ReplyBrief 14 (quoting 485 U S at 247 alteration in original)Halliburton identifies a number of classes of investors for whom ldquoprice integrityrdquo is supposedly ldquomarginal or irrele-vantrdquo Reply Brief 14 The primary example is the value investor who believes that certain stocks are undervalued or overvalued and attempts to ldquobeat the marketrdquo by buyingthe undervalued stocks and selling the overvalued ones Brief for Petitioners 15ndash16 (internal quotation marksomitted) See also Brief for Vivendi S A as Amicus Curiae 3ndash10 (describing the investment strategies of day trad-ers volatility arbitragers and value investors) If manyinvestors ldquoare indifferent to pricesrdquo Halliburton contendsthen courts should not presume that investors rely on theintegrity of those prices and any misrepresentations in-corporated into them Reply Brief 14

But Basic never denied the existence of such investors As we recently explained Basic concluded only that ldquoit is reasonable to presume that most investorsmdashknowing that



they have little hope of outperforming the market in the long run based solely on their analysis of publicly availa-ble informationmdashwill rely on the securityrsquos market price asan unbiased assessment of the securityrsquos value in light of all public informationrdquo Amgen 568 U S at ___ (slip op at 5) (emphasis added)

In any event there is no reason to suppose that even Halliburtonrsquos main counterexamplemdashthe value investormdashis as indifferent to the integrity of market prices as Halli-burton suggests Such an investor implicitly relies on thefact that a stockrsquos market price will eventually reflect material informationmdashhow else could the market correc-tion on which his profit depends occur To be sure the value investor ldquodoes not believe that the market priceaccurately reflects public information at the time he trans-actsrdquo Post at 11 But to indirectly rely on a misstate-ment in the sense relevant for the Basic presumption he need only trade stock based on the belief that the market price will incorporate public information within a reason-able period The value investor also presumably tries toestimate how undervalued or overvalued a particular stock is and such estimates can be skewed by a marketprice tainted by fraud

C The principle of stare decisis has ldquo lsquospecial forcersquo rdquo ldquoin

respect to statutory interpretationrdquo because ldquo lsquoCongress remains free to alter what we have donersquo rdquo John R Sand amp Gravel Co v United States 552 U S 130 139 (2008) (quoting Patterson v McLean Credit Union 491 U S 164 172ndash173 (1989)) So too with Basicrsquos presumption of reli-ance Although the presumption is a judicially created doctrine designed to implement a judicially created cause of action we have described the presumption as ldquoa sub-stantive doctrine of federal securities-fraud lawrdquo Amgen supra at ___ (slip op at 5) That is because it provides a

13 Cite as 573 U S ____ (2014)


way of satisfying the reliance element of the Rule 10bndash5cause of action See eg Dura Pharmaceuticals Inc v Broudo 544 U S 336 341ndash342 (2005) As with any other element of that cause of action Congress may overturnor modify any aspect of our interpretations of the reliance requirement including the Basic presumption it-self Given that possibility we see no reason to exemptthe Basic presumption from ordinary principles of stare decisis

To buttress its case for overruling Basic Halliburton contends that in addition to being wrongly decided the decision is inconsistent with our more recent decisions construing the Rule 10bndash5 cause of action As Halliburton notes we have held that ldquowe must give lsquonarrow dimen-sions to a right of action Congress did not authorizewhen it first enacted the statute and did not expand when it revisited the lawrsquo rdquo Janus Capital Group Inc v First Derivative Traders 564 U S ___ ___ (2011) (slip op at 6) (quoting Stoneridge 552 U S at 167) see eg Central Bank of Denver N A v First Interstate Bank of Denver N A 511 U S 164 (1994) (refusing to recognize aiding-and-abetting liability under the Rule 10bndash5 cause of ac-tion) Stoneridge supra (refusing to extend Rule 10bndash5liability to certain secondary actors who did not them-selves make material misstatements) Yet the Basic presumption Halliburton asserts does just the opposite expanding the Rule 10bndash5 cause of action Brief for Peti-tioners 27ndash29

Not so In Central Bank and Stoneridge we declined to extend Rule 10bndash5 liability to entirely new categories of defendants who themselves had not made any materialpublic misrepresentation Such an extension we ex-plained would have eviscerated the requirement that aplaintiff prove that he relied on a misrepresentation made by the defendant See Central Bank supra at 180 Stone-ridge supra at 157 159 The Basic presumption does



not eliminate that requirement but rather provides analternative means of satisfying it While the presumptionmakes it easier for plaintiffs to prove reliance it does not alter the elements of the Rule 10bndash5 cause of action and thus maintains the actionrsquos original legal scope

Halliburton also argues that the Basic presumptioncannot be reconciled with our recent decisions governingclass action certification under Federal Rule of Civil Pro-cedure 23 Those decisions have made clear that plaintiffs wishing to proceed through a class action must actually provemdashnot simply pleadmdashthat their proposed class satis-fies each requirement of Rule 23 including (if applicable)the predominance requirement of Rule 23(b)(3) See Wal-Mart Stores Inc v Dukes 564 U S ___ ___ (2011) (slip op at 10) Comcast Corp v Behrend 569 U S ___ ___ (2013) (slip op at 5ndash6) According to Halliburton Basic relieves Rule 10bndash5 plaintiffs of that burden allowingcourts to presume that common issues of reliance predom-inate over individual ones

That is not the effect of the Basic presumption In securities class action cases the crucial requirement forclass certification will usually be the predominance re-quirement of Rule 23(b)(3) The Basic presumption doesnot relieve plaintiffs of the burden of provingmdashbefore classcertificationmdashthat this requirement is met Basic instead establishes that a plaintiff satisfies that burden by prov-ing the prerequisites for invoking the presumptionmdashnamely publicity materiality market efficiency and market timing The burden of proving those prerequisitesstill rests with plaintiffs and (with the exception of mate-riality) must be satisfied before class certification Basic does not in other words allow plaintiffs simply to plead that common questions of reliance predominate over indi-vidual ones but rather sets forth what they must prove todemonstrate such predominance

Basic does afford defendants an opportunity to rebut the

15 Cite as 573 U S ____ (2014)


presumption of reliance with respect to an individualplaintiff by showing that he did not rely on the integrity ofthe market price in trading stock While this has the effect of ldquoleav[ing] individualized questions of reliance in the caserdquo post at 12 there is no reason to think that these questions will overwhelm common ones and render class certification inappropriate under Rule 23(b)(3) That the defendant might attempt to pick off the occasional class member here or there through individualized rebuttaldoes not cause individual questions to predominate

Finally Halliburton and its amici contend that by facilitating securities class actions the Basic presumptionproduces a number of serious and harmful consequencesSuch class actions they say allow plaintiffs to extort largesettlements from defendants for meritless claims punishinnocent shareholders who end up having to pay settle-ments and judgments impose excessive costs on businessesand consume a disproportionately large share of judicial resources Brief for Petitioners 39ndash45

These concerns are more appropriately addressed toCongress which has in fact responded to some extent to many of the issues raised by Halliburton and its amici Congress has for example enacted the Private Securities Litigation Reform Act of 1995 (PSLRA) 109 Stat 737which sought to combat perceived abuses in securitieslitigation with heightened pleading requirements limitson damages and attorneyrsquos fees a ldquosafe harborrdquo for certain kinds of statements restrictions on the selection of lead plaintiffs in securities class actions sanctions for frivolouslitigation and stays of discovery pending motions to dis-miss See Amgen 568 U S at ___ (slip op at 19ndash20) And to prevent plaintiffs from circumventing these re-strictions by bringing securities class actions under state law in state court Congress also enacted the Securities Litigation Uniform Standards Act of 1998 112 Stat 3227which precludes many state law class actions alleging



securities fraud See Amgen supra at ___ (slip op at 20) Such legislation demonstrates Congressrsquos willingness toconsider policy concerns of the sort that Halliburton says should lead us to overrule Basic

III Halliburton proposes two alternatives to overruling

Basic that would alleviate what it regards as the decisionrsquos most serious flaws The first alternative would requireplaintiffs to prove that a defendantrsquos misrepresentation actually affected the stock pricemdashso-called ldquoprice im-pactrdquomdashin order to invoke the Basic presumption It should not be enough Halliburton contends for plaintiffs to demonstrate the general efficiency of the market in whichthe stock traded Halliburtonrsquos second proposed alterna-tive would allow defendants to rebut the presumption of reliance with evidence of a lack of price impact not only at the merits stagemdashwhich all agree defendants may already domdashbut also before class certification

A As noted to invoke the Basic presumption a plaintiff

must prove that (1) the alleged misrepresentations werepublicly known (2) they were material (3) the stock tradedin an efficient market and (4) the plaintiff traded thestock between when the misrepresentations were made and when the truth was revealed See Basic 485 U S at 248 n 27 Amgen supra at ___ (slip op at 15) Each of these requirements follows from the fraud-on-the-market theory underlying the presumption If the misrepresenta-tion was not publicly known then it could not have dis-torted the stockrsquos market price So too if the misrepresen-tation was immaterialmdashthat is if it would not have ldquo lsquobeen viewed by the reasonable investor as having significantly altered the ldquototal mixrdquo of information made availablersquo rdquo Basic supra at 231ndash232 (quoting TSC Industries Inc v

17 Cite as 573 U S ____ (2014)


Northway Inc 426 U S 438 449 (1976))mdashor if the mar-ket in which the stock traded was inefficient And if the plaintiff did not buy or sell the stock after the misrepre-sentation was made but before the truth was revealed then he could not be said to have acted in reliance on a fraud-tainted price

The first three prerequisites are directed at price im-pactmdashldquowhether the alleged misrepresentations affected the market price in the first placerdquo Halliburton I 563 U S at ___ (slip op at 8) In the absence of price impact Basicrsquos fraud-on-the-market theory and presumption of reliance collapse The ldquofundamental premiserdquo underlying the presumption is ldquothat an investor presumptively relies on a misrepresentation so long as it was reflected in the market price at the time of his transactionrdquo 563 U S at ___ (slip op at 7) If it was not then there is ldquono ground-ing for any contention that [the] investor[ ] indirectlyrelied on th[at] misrepresentation[ ] through [his] reliance on the integrity of the market pricerdquo Amgen supra at ___ (slip op at 17)

Halliburton argues that since the Basic presumptionhinges on price impact plaintiffs should be required toprove it directly in order to invoke the presumptionProving the presumptionrsquos prerequisites which are at best an imperfect proxy for price impact should not suffice

Far from a modest refinement of the Basic presumptionthis proposal would radically alter the required showingfor the reliance element of the Rule 10bndash5 cause of action What is called the Basic presumption actually incorpo-rates two constituent presumptions First if a plaintiffshows that the defendantrsquos misrepresentation was public and material and that the stock traded in a generally efficient market he is entitled to a presumption that the misrepresentation affected the stock price Second if the plaintiff also shows that he purchased the stock at themarket price during the relevant period he is entitled to a



further presumption that he purchased the stock in reli-ance on the defendantrsquos misrepresentation

By requiring plaintiffs to prove price impact directlyHalliburtonrsquos proposal would take away the first constitu-ent presumption Halliburtonrsquos argument for doing so isthe same as its primary argument for overruling the Basic presumption altogether Because market efficiency is not ayes-or-no proposition a public material misrepresentation might not affect a stockrsquos price even in a generally efficientmarket But as explained Basic never suggested other-wise that is why it affords defendants an opportunity torebut the presumption by showing among other things that the particular misrepresentation at issue did not affect the stockrsquos market price For the same reasons we declined to completely jettison the Basic presumption we decline to effectively jettison half of it by revising theprerequisites for invoking it

B Even if plaintiffs need not directly prove price impact to

invoke the Basic presumption Halliburton contends that defendants should at least be allowed to defeat the pre-sumption at the class certification stage through evidencethat the misrepresentation did not in fact affect the stock price We agree

1 There is no dispute that defendants may introduce such

evidence at the merits stage to rebut the Basic presump-tion Basic itself ldquomade clear that the presumption wasjust that and could be rebutted by appropriate evidencerdquo including evidence that the asserted misrepresentation (orits correction) did not affect the market price of the de-fendantrsquos stock Halliburton I supra at ___ (slip op at 5) see Basic supra at 248

Nor is there any dispute that defendants may introduce

19 Cite as 573 U S ____ (2014)


price impact evidence at the class certification stage so long as it is for the purpose of countering a plaintiff rsquos showing of market efficiency rather than directly rebut-ting the presumption As EPJ Fund acknowledges ldquo[o]f course defendants can introduce evidence at class certification of lack of price impact as some evidence thatthe market is not efficientrdquo Brief for Respondent 53 See also Brief for United States as Amicus Curiae 26

After all plaintiffs themselves can and do introduce evidence of the existence of price impact in connection withldquoevent studiesrdquomdashregression analyses that seek to showthat the market price of the defendantrsquos stock tends to respond to pertinent publicly reported events See Brief for Law Professors as Amici Curiae 25ndash28 In this case for example EPJ Fund submitted an event study of vari-ous episodes that might have been expected to affect theprice of Halliburtonrsquos stock in order to demonstrate thatthe market for that stock takes account of material publicinformation about the company See App 217ndash230 (de-scribing the results of the study) The episodes examined by EPJ Fundrsquos event study included one of the alleged misrepresentations that form the basis of the Fundrsquos suitSee id at 230 343ndash344 See also In re Xceleracom Secu-rities Litigation 430 F 3d 503 513 (CA1 2005) (event study included effect of misrepresentation challenged inthe case)

Defendantsmdashlike plaintiffsmdashmay accordingly submit price impact evidence prior to class certification What defendants may not do EPJ Fund insists and the Court ofAppeals held is rely on that same evidence prior to class certification for the particular purpose of rebutting thepresumption altogether

This restriction makes no sense and can readily lead tobizarre results Suppose a defendant at the certificationstage submits an event study looking at the impact on the price of its stock from six discrete events in an effort to



refute the plaintiffsrsquo claim of general market efficiency All agree the defendant may do this Suppose one of thesix events is the specific misrepresentation asserted by theplaintiffs All agree that this too is perfectly acceptable Now suppose the district court determines that despitethe defendantrsquos study the plaintiff has carried its burdento prove market efficiency but that the evidence shows noprice impact with respect to the specific misrepresentation challenged in the suit The evidence at the certification stage thus shows an efficient market on which the allegedmisrepresentation had no price impact And yet under EPJ Fundrsquos view the plaintiffsrsquo action should be certified and proceed as a class action (with all that entails) even though the fraud-on-the-market theory does not apply and common reliance thus cannot be presumed

Such a result is inconsistent with Basicrsquos own logic Under Basicrsquos fraud-on-the-market theory market effi-ciency and the other prerequisites for invoking the pre-sumption constitute an indirect way of showing price impact As explained it is appropriate to allow plaintiffsto rely on this indirect proxy for price impact rather thanrequiring them to prove price impact directly given Basicrsquos rationales for recognizing a presumption of reli-ance in the first place See supra at 6ndash7 16ndash17

But an indirect proxy should not preclude direct evi-dence when such evidence is available As we explained in Basic ldquo[a]ny showing that severs the link between thealleged misrepresentation and the price received (orpaid) by the plaintiff will be sufficient to rebut the presumption of reliancerdquo because ldquothe basis for finding that the fraud had been transmitted through market price would be gonerdquo 485 U S at 248 And without the pre-sumption of reliance a Rule 10bndash5 suit cannot proceed asa class action Each plaintiff would have to prove reliance individually so common issues would not ldquopredominaterdquo over individual ones as required by Rule 23(b)(3) Id at

21 Cite as 573 U S ____ (2014)


242 Price impact is thus an essential precondition for any Rule 10bndash5 class action While Basic allows plaintiffs to establish that precondition indirectly it does not require courts to ignore a defendantrsquos direct more salient evidenceshowing that the alleged misrepresentation did not actuallyaffect the stockrsquos market price and consequently that the Basic presumption does not apply

2 The Court of Appeals relied on our decision in Amgen in

holding that Halliburton could not introduce evidence of lack of price impact at the class certification stage The question in Amgen was whether plaintiffs could be re-quired to prove (or defendants be permitted to disprove) materiality before class certification Even though mate-riality is a prerequisite for invoking the Basic presump-tion we held that it should be left to the merits stagebecause it does not bear on the predominance requirement of Rule 23(b)(3) We reasoned that materiality is an objec-tive issue susceptible to common classwide proof 568 U S at ___ (slip op at 11) We also noted that a failure to prove materiality would necessarily defeat every plain-tiff rsquos claim on the merits it would not simply precludeinvocation of the presumption and thereby cause individualquestions of reliance to predominate over common ones Ibid See also id at ___ (slip op at 17ndash18) In this latter respect we explained materiality differs from the publicity and market efficiency prerequisites neither of which isnecessary to prove a Rule 10bndash5 claim on the merits Id at ___ndash___ (slip op at 16ndash18)

EPJ Fund argues that much of the foregoing could besaid of price impact as well Fair enough But price im-pact differs from materiality in a crucial respect Given that the other Basic prerequisites must still be proved at the class certification stage the common issue of material-ity can be left to the merits stage without risking the



certification of classes in which individual issues will end up overwhelming common ones And because materialityis a discrete issue that can be resolved in isolation from the other prerequisites it can be wholly confined to themerits stage

Price impact is different The fact that a misrepresenta-tion ldquowas reflected in the market price at the time of [the]transactionrdquomdashthat it had price impactmdashis ldquoBasicrsquos funda-mental premiserdquo Halliburton I 563 U S at ___ (slip op at 7) It thus has everything to do with the issue of pre-dominance at the class certification stage That is why if reliance is to be shown through the Basic presumptionthe publicity and market efficiency prerequisites must beproved before class certification Without proof of thoseprerequisites the fraud-on-the-market theory underlying the presumption completely collapses rendering class certification inappropriate

But as explained publicity and market efficiency arenothing more than prerequisites for an indirect showing of price impact There is no dispute that at least such indi-rect proof of price impact ldquois needed to ensure that the questions of law or fact common to the class will lsquopredomi-natersquo rdquo Amgen 568 U S at ___ (slip op at 10) (emphasis deleted) see id at ___ (slip op at 16ndash17) That is so even though such proof is also highly relevant at the merits stage

Our choice in this case then is not between allowingprice impact evidence at the class certification stage orrelegating it to the merits Evidence of price impact willbe before the court at the certification stage in any eventThe choice rather is between limiting the price impact inquiry before class certification to indirect evidence or allowing consideration of direct evidence as well As explained we see no reason to artificially limit the inquiryat the certification stage to indirect evidence of price impact Defendants may seek to defeat the Basic pre-

23 Cite as 573 U S ____ (2014)


sumption at that stage through direct as well as indirectprice impact evidence

More than 25 years ago we held that plaintiffs could

satisfy the reliance element of the Rule 10bndash5 cause of action by invoking a presumption that a public material misrepresentation will distort the price of stock traded in an efficient market and that anyone who purchases the stock at the market price may be considered to have done so in reliance on the misrepresentation We adhere to that decision and decline to modify the prerequisites for invok-ing the presumption of reliance But to maintain the consistency of the presumption with the class certificationrequirements of Federal Rule of Civil Procedure 23 de-fendants must be afforded an opportunity before class certification to defeat the presumption through evidencethat an alleged misrepresentation did not actually affect the market price of the stock

Because the courts below denied Halliburton that oppor-tunity we vacate the judgment of the Court of Appeals for the Fifth Circuit and remand the case for further proceed-ings consistent with this opinion

It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)

GINSBURG J concurring


No 13ndash317



[June 23 2014]

JUSTICE GINSBURG with whom JUSTICE BREYER and JUSTICE SOTOMAYOR join concurring

Advancing price impact consideration from the merits stage to the certification stage may broaden the scope of discovery available at certification See Tr of Oral Arg36ndash37 But the Court recognizes that it is incumbent uponthe defendant to show the absence of price impact See ante at 17ndash18 The Courtrsquos judgment therefore should impose no heavy toll on securities-fraud plaintiffs with tenable claims On that understanding I join the Courtrsquos opinion

_________________

_________________

1 Cite as 573 U S ____ (2014)

THOMAS J concurring in judgment


No 13ndash317



[June 23 2014]

JUSTICE THOMAS with whom JUSTICE SCALIA and JUSTICE ALITO join concurring in the judgment

The implied Rule 10bndash5 private cause of action is ldquoarelic of the heady days in which this Court assumedcommon-law powers to create causes of actionrdquo Correc-tional Services Corp v Malesko 534 U S 61 75 (2001) (SCALIA J concurring) see eg J I Case Co v Borak 377 U S 426 433 (1964) We have since ended that practice because the authority to fashion private remediesto enforce federal law belongs to Congress alone Stone-ridge Investment Partners LLC v Scientific-Atlanta Inc 552 U S 148 164 (2008) Absent statutory authorizationfor a cause of action ldquocourts may not create one no matterhow desirable that might be as a policy matterrdquo Alexan-der v Sandoval 532 U S 275 286ndash287 (2001)

Basic Inc v Levinson 485 U S 224 (1988) demonshystrates the wisdom of this rule Basic presented the quesshytion how investors must prove the reliance element of the implied Rule 10bndash5 cause of actionmdashthe requirement that the plaintiff buy or sell stock in reliance on the defendantrsquos misstatementmdashwhen they transact on modern impersonalsecurities exchanges Were the Rule 10bndash5 action statu-tory the Court could have resolved this question by intershypreting the statutory language Without a statute to



interpret for guidance however the Court began insteadwith a particular policy ldquoproblemrdquo for investors in impershysonal markets the traditional reliance requirement washard to prove and impossible to prove as common among plaintiffs bringing 10bndash5 class-action suits Id at 242 245 With the task thus framed as ldquoresol[ving]rdquo that ldquo lsquoproblemrsquo rdquo rather than interpreting statutory text id at 242 the Court turned to nascent economic theory and naked intuitions about investment behavior in its efforts to fashion a new easier way to meet the reliance requireshyment The result was an evidentiary presumption based on a ldquofraud on the marketrdquo theory that paved the way forclass actions under Rule 10bndash5

Today we are asked to determine whether Basic was correctly decided The Court suggests that it was and that stare decisis demands that we preserve it I disagreeLogic economic realities and our subsequent jurisprushydence have undermined the foundations of the Basic preshysumption and stare decisis cannot prop up the faccedilade that remains Basic should be overruled

I Understanding where Basic went wrong requires anexplanation of the ldquoreliancerdquo requirement as traditionally understood

ldquoReliance by the plaintiff upon the defendantrsquos deceptiveacts is an essential elementrdquo of the implied 10bndash5 privatecause of action1 Stoneridge supra at 159 To prove

mdashmdashmdashmdashmdashmdash 1 As the private Rule 10bndash5 action has evolved the Court has drawn

on the common-law action of deceit to identify six elements a privateplaintiff must prove ldquo lsquo(1) a material misrepresentation or omission bythe defendant (2) scienter (3) a connection between the misrepresentashytion or omission and the purchase or sale of a security (4) reliance upon the misrepresentation or omission (5) economic loss and (6) loss causationrsquo rdquo Amgen Inc v Connecticut Retirement Plans and Trust Funds 568 U S ___ ___ndash___ (2013) (slip op at 3ndash4)

3 Cite as 573 U S ____ (2014)


reliance the plaintiff must show ldquo lsquotransaction causationrsquo rdquo ie that the specific misstatement induced ldquothe investorrsquosdecision to engage in the transactionrdquo Erica P John Fund Inc v Halliburton Co 563 U S ___ ___ndash___ (2011) (slip op at 6ndash7) Such proof ldquoensures that there isa proper lsquoconnection between a defendantrsquos misrepresentashytion and a plaintiff rsquos injuryrsquo rdquomdashnamely that the plaintiff has not just lost money as a result of the misstatement but that he was actually defrauded by it Id at ___ (slip op at 4) see also Dirks v SEC 463 U S 646 666ndash667 n 27 (1983) (ldquo[T]o constitute a violation of Rule 10bndash5 there must be fraud [T]here always are winners and losers but those who have lsquolostrsquo have not necessarily been deshyfraudedrdquo) Without that connection Rule 10bndash5 is reduced to a ldquo lsquoscheme of investorrsquos insurancersquo rdquo because a plaintiff could recover whenever the defendantrsquos misstatement distorted the stock pricemdashregardless of whether the misshystatement had actually tricked the plaintiff into buying (or selling) the stock in the first place Dura Pharmaceuti-cals Inc v Broudo 544 U S 336 345 (2005) (quoting Basic supra at 252 (White J concurring in part and dissenting in part))

The ldquotraditionalrdquo reliance element requires a plaintiff toldquosho[w] that he was aware of a companyrsquos statement and engaged in a relevant transaction based on that specific misrepresentationrdquo Erica P John Fund supra at ___ (slip op at 4) But investors who purchase stock from third parties on impersonal exchanges (eg the New York Stock Exchange) often will not be aware of any particular statement made by the issuer of the security and thereshyfore cannot establish that they transacted based on aspecific misrepresentation Nor is the traditional reliance requirement amenable to class treatment the inherently individualized nature of the reliance inquiry renders it impossible for a 10bndash5 plaintiff to prove that commonquestions predominate over individual ones making class



certification improper See Basic supra at 242 Fed Rule Civ Proc 23(b)(3)

Citing these difficulties of proof and class certification485 U S at 242 245 the Basic Court dispensed with thetraditional reliance requirement in favor of a new onebased on the fraud-on-the-market theory2 The new vershysion of reliance had two related parts

First Basic suggested that plaintiffs could meet thereliance requirement ldquo lsquoindirectlyrsquo rdquo id at 245 The Court reasoned that ldquo lsquoideally [the market] transmits inforshymation to the investor in the processed form of a marketpricersquo rdquo Id at 244 An investor could thus be said to have ldquoreliedrdquo on a specific misstatement if (1) the market had incorporated that statement into the market price of thesecurity and (2) the investor then bought or sold thatsecurity ldquoin reliance on the integrity of the [market] pricerdquo id at 247 ie based on his belief that the market price ldquo lsquoreflect[ed]rsquo rdquo the stockrsquos underlying ldquo lsquovaluersquo rdquo id at 244

Second Basic created a presumption that this ldquoindirectrdquo form of ldquoreliancerdquo had been proved Based primarily oncertain assumptions about economic theory and investor behavior Basic afforded plaintiffs who traded in efficient markets an evidentiary presumption that both steps of the novel reliance requirement had been satisfiedmdashthat (1) the market had incorporated the specific misstatement into the market price of the security and (2) the plaintiff

mdashmdashmdashmdashmdashmdash 2 In the years preceding Basic lower courts and commentators expershy

imented with various ways to facilitate 10bndash5 class actions by relaxingor eliminating the reliance element of the implied 10bndash5 action See eg Blackie v Barrack 524 F 2d 891 (CA9 1975) Note The Fraud-onshythe-Market Theory 95 Harv L Rev 1143 (1982) Note The RelianceRequirement in Private Actions under SEC Rule 10bndash5 88 Harv L Rev 584 592ndash606 (1975) The ldquofraud-on-the-market theoryrdquo is an umbrella term for those varied efforts Black Fraud on the Market A Criticism of Dispensing with Reliance Requirements in Certain Open Market Transactions 62 N C L Rev 435 439ndash457 (1984)

5 Cite as 573 U S ____ (2014)


did transact in reliance on the integrity of that price3 Id at 247 A defendant was ostensibly entitled to rebut the presumption by putting forth evidence that either of thosesteps was absent Id at 248

II Basicrsquos reimagined reliance requirement was a mistake

and the passage of time has compounded its failingsFirst the Court based both parts of the presumption of reliance on a questionable understanding of disputed economic theory and flawed intuitions about investorbehavior Second Basicrsquos rebuttable presumption is at odds with our subsequent Rule 23 cases which requireplaintiffs seeking class certification to ldquo lsquoaffirmativelydemonstratersquo rdquo certification requirements like the predomshyinance of common questions Comcast Corp v Behrend 569 U S ___ ___ (2013) (slip op at 5) (quoting Wal-Mart Stores Inc v Dukes 564 U S ___ ___ (2011) (slip op at 10)) Finally Basicrsquos presumption that investors rely on the integrity of the market price is virtually irrebuttable in practice which means that the ldquoessentialrdquo reliance element effectively exists in name only

A Basic based the presumption of reliance on two factual

assumptions The first assumption was that in a ldquowellshydeveloped marketrdquo public statements are generally ldquoreshyflectedrdquo in the market price of securities 485 U S at 247 The second was that investors in such markets transact ldquoin reliance on the integrity of that pricerdquo Ibid

mdashmdashmdashmdashmdashmdash 3 An investor could invoke this presumption by demonstrating certain

predicates (1) a public statement (2) an efficient market (3) that the shares were traded after the statement was made but before the truth was revealed and (4) that the statement was material Basic 485 U S at 248 n 27



In other words the Court created a presumption that a plaintiff had met the two-part fraud-on-the-market vershysion of the reliance requirement because in the Courtrsquosview ldquocommon sense and probabilityrdquo suggested that each of those parts would be met Id at 246

In reality both of the Courtrsquos key assumptions are highly contestable and do not provide the necessary supshyport for Basicrsquos presumption of reliance The first assumpshytionmdashthat public statements are ldquoreflectedrdquo in the market pricemdashwas grounded in an economic theory that hasgarnered substantial criticism since Basic The second as-sumptionmdashthat investors categorically rely on the integrity of the market pricemdashis simply wrong

1 The Courtrsquos first assumption was that ldquomost publicly

available informationrdquomdashincluding public misstatementsmdashldquois reflected in [the] market pricerdquo of a security Id at 247 The Court grounded that assumption in ldquoempiricalstudiesrdquo testing a then-nascent economic theory known asthe efficient capital markets hypothesis Id at 246ndash247 Specifically the Court relied upon the ldquosemi-strongrdquo vershysion of that theory which posits that the average investor cannot earn above-market returns (ie ldquobeat the marketrdquo)in an efficient market by trading on the basis of publicly available information See eg Stout The Mechanisms of Market Inefficiency An Introduction to the New Finance28 J Corp L 635 640 and n 24 (2003) (citing FamaEfficient Capital Markets A Review of Theory and Empirshyical Work 25 J Finance 383 388 (1970))4 The upshot of

mdashmdashmdashmdashmdashmdash 4 The ldquoweak formrdquo of the hypothesis provides that an investor cannot

earn an above-market return by trading on historical price data See Dunbar amp Heller Fraud on the Market Meets Behavioral Finance 31 Del J Corporate L 455 463ndash464 (2006) (hereinafter Dunbar amp Heller) The ldquostrong formrdquo provides that investors cannot achieve above-market returns even by trading on nonpublic information See ibid The weak

7 Cite as 573 U S ____ (2014)


the hypothesis is that ldquothe market price of shares traded on well-developed markets [will] reflec[t] all publicly available information and hence any material misrepreshysentationsrdquo Basic supra at 246 At the time of Basic this version of the efficient capital markets hypothesis was ldquowidely acceptedrdquo See Dunbar amp Heller 463ndash464

This view of market efficiency has since lost its luster See eg Langevoort Basic at Twenty Rethinking Fraud on the Market 2009 Wis L Rev 151 175 (ldquoDoubts about the strength and pervasiveness of market efficiency are much greater today than they were in the mid-1980srdquo) As it turns out even ldquowell-developedrdquo markets (like the NewYork Stock Exchange) do not uniformly incorporate inforshymation into market prices with high speed ldquo[F]riction in accessing public informationrdquo and the presence of ldquoproshycessing costsrdquo means that ldquonot all public information willbe impounded in a securityrsquos price with the same alacrityor perhaps with any quickness at allrdquo Cox Understandshying Causation in Private Securities Lawsuits Building on Amgen 66 Vand L Rev 1719 1732 (2013) (hereinafter Cox) For example information that is easily digestible(merger announcements or stock splits) or especiallyprominent (Wall Street Journal articles) may be incorposhyrated quickly while information that is broadly applicableor technical (Securities and Exchange Commission filings) may be incorporated slowly or even ignored See Stout supra at 653ndash656 see eg In re Merck amp Co Securities Litigation 432 F 3d 261 263ndash265 (CA3 2005) (a Wall Street Journal article caused a steep decline in the comshypanyrsquos stock price even though the same information was contained in an earlier SEC disclosure)

Further and more importantly ldquooverwhelming empirishycal evidencerdquo now suggests that even when markets do incorporate public information they often fail to do so

mdashmdashmdashmdashmdashmdash

form is generally accepted the strong form is not See ibid



accurately Lev and de Villiers Stock Price Crashes and 10bndash5 Damages A Legal Economic and Policy Analysis 47 Stan L Rev 7 20ndash21 (1994) see also id at 21 (ldquoThatmany share price movements seem unrelated to specific information strongly suggests that capital markets are notfundamentally efficient and that wide deviations fromfundamentals can occurrdquo(footnote omitted)) ldquoScoresrdquo of ldquoefficiency-defying anomaliesrdquomdashsuch as market swings in the absence of new information and prolonged deviashytions from underlying asset valuesmdashmake market efficiency ldquomore contestable than everrdquo Langevoort Taming the Animal Spirits of the Stock Markets A Behavioral Apshyproach to Securities Regulation 97 Nw U L Rev 135141 (2002) Dunbar amp Heller 476ndash483 Such anomalies make it difficult to tell whether at any given moment astockrsquos price accurately reflects its value as indicated byall publicly available information In sum economists now understand that the price impact Basic assumed would happen reflexively is actually far from certain evenin ldquowell-developedrdquo markets Thus Basicrsquos claim that ldquocommon sense and probabilityrdquo support a presumption ofreliance rests on shaky footing

2 The Basic Court also grounded the presumption of

reliance in a second assumption that ldquo[a]n investor whobuys or sells stock at the price set by the market does so in reliance on the integrity of that pricerdquo 485 U S at 247 In other words the Court assumed that investors transact based on the belief that the market price accurately reshyflects the underlying ldquo lsquovaluersquo rdquo of the security See id at 244 (ldquo lsquo[P]urchasers generally rely on the price of the stock as a reflection of its valuersquo rdquo) The Basic Court appears tohave adopted this assumption about investment behavior based only on what it believed to be ldquocommon senserdquo Id at 246 The Court found it ldquo lsquohard to imagine that there

9 Cite as 573 U S ____ (2014)


ever is a buyer or seller who does not rely on market inshytegrity Who would knowingly roll the dice in a crooked crap gamersquo rdquo Id at 246ndash247

The Courtrsquos rather superficial analysis does not withshystand scrutiny It cannot be seriously disputed that a great many investors do not buy or sell stock based on a belief that the stockrsquos price accurately reflects its value Many investors in fact trade for the opposite reasonmdashthat is because they think the market has under- or overvalshyued the stock and they believe they can profit from thatmispricing Id at 256 (opinion of White J) see egMacey The Fraud on the Market Theory Some Prelimishynary Issues 74 Cornell L Rev 923 925 (1989) (The ldquoopshypositerdquo of Basicrsquos assumption appears to be true someinvestors ldquoattempt to locate undervalued stocks in an effort to lsquobeat the marketrsquo in essence betting that the market is in fact inefficientrdquo) Indeed securities transactions often take place because the transactingparties disagree on the securityrsquos value See eg Stout Are Stock Markets Costly Casinos Disagreement Mar- ket Failure and Securities Regulation 81 Va L Rev611 619 (1995) (ldquo[A]vailable evidence suggests that investor disagreement inspires the lionrsquos share of equitiestransactionsrdquo)

Other investors trade for reasons entirely unrelated topricemdashfor instance to address changing liquidity needstax concerns or portfolio balancing requirements See id at 657ndash658 see also Cox 1739 (investors may purchase ldquodue to portfolio rebalancing arising from its obeisance to an indexing strategyrdquo) These investment decisionsmdash made with indifference to price and thus without regardfor price ldquointegrityrdquomdashare at odds with Basicrsquos understandshying of what motivates investment decisions In short Basicrsquos assumption that all investors rely in common on



ldquoprice integrityrdquo is simply wrong5

The majority tries (but fails) to reconcile Basicrsquos asshysumption about investor behavior with the reality thatmany investors do not behave in the way Basic assumed It first asserts that Basic rested only on the more modest view that ldquo lsquomost investorsrsquo rdquo rely on the integrity of a securityrsquos market price Ante at 12 (quoting not Basic but Amgen Inc v Connecticut Retirement Plans amp Trust Funds 568 U S ___ ___ (2013) (slip op at 5) (emphasisadded)) That gloss is difficult to square with Basicrsquos plainlanguage ldquoAn investor who buys or sells stock at the price set by the market does so in reliance on the integrity of that pricerdquo Basic 458 U S at 247 see also id at 246ndash 247 (ldquo lsquo[I]t is hard to imagine that there ever is a buyer or seller who does not rely on market integrityrsquo rdquo) In anyevent neither Basic nor the majority offers anything morethan a judicial hunch as evidence that even ldquomostrdquo invesshytors rely on price integrity

The majority also suggests that ldquothere is no reason tosupposerdquo that investors who buy stock they believe to beundervalued are ldquoindifferent to the integrity of marketpricesrdquo Ante at 12 Such ldquovalue investor[s]rdquo according tothe majority ldquoimplicitly rel[y] on the fact that a stockrsquosmarket price will eventually reflect material informationrdquo

mdashmdashmdashmdashmdashmdash 5 The Basic Courtrsquos mistaken intuition about investor behavior apshy

pears to involve a category mistake the Court invoked a hypothesismeant to describe markets but then used it ldquoin the one way it is not meant to be used as a predictor of the behavior of individual investorsrdquo Langevoort Theories Assumptions and Securities Regulation Market Efficiency Revisited 140 U Pa L Rev 851 895 (1992) The efficient capital markets hypothesis does not describe ldquohow investors behave [it]only suggests the consequences of their collective behaviorrdquo Cox 1736 ldquoNothing in the hypothesis denies what most popular accounts assumethat much information searching and trading by investors from instishytutions on down is done in the (perhaps erroneous) belief that undershyvalued or overvalued stocks exist and can systematically be discoveredrdquo Langevoort Theories supra at 895

11 Cite as 573 U S ____ (2014)


and ldquopresumably tr[y] to estimate how undervalued or overvalued a particular stock isrdquo by reference to the marshyket price Ibid Whether the majorityrsquos unsupportedclaims about the thought processes of hypothetical invesshytors are accurate or not they are surely beside the point Whatever else an investor believes about the market he simply does not ldquorely on the integrity of the market pricerdquo if he does not believe that the market price accuratelyreflects public information at the time he transacts That is an investor cannot claim that a public misstatement induced his transaction by distorting the market price ifhe did not buy at that price while believing that it accushyrately incorporated that public information For that sort of investor Basicrsquos critical fiction falls apart

B Basicrsquos presumption of reliance also conflicts with our

more recent cases clarifying Rule 23rsquos class-certificationrequirements Those cases instruct that ldquoa party seekingto maintain a class action lsquomust affirmatively demonstrate his compliancersquo with Rule 23rdquo Comcast 569 U S at ___ (slip op at 5) (quoting Wal-Mart 564 U S at ___ (slip op at 10) To prevail on a motion for class certification aparty must demonstrate through ldquoevidentiary proof rdquo that ldquo lsquoquestions of law or fact common to class members preshydominate over any questions affecting only individualmembersrsquo rdquo 569 U S at ___ (slip op at 5ndash6) (quoting Fed Rule Civ Proc 23(b)(3))

Basic permits plaintiffs to bypass that requirement of evidentiary proof Under Basic plaintiffs who invoke the presumption of reliance (by proving its predicates) aredeemed to have met the predominance requirement ofRule 23(b)(3) See ante at 14 Amgen supra at ___ (slip op at 6) (Basic ldquofacilitates class certification by recognizshying a rebuttable presumption of classwide reliancerdquo) Basic 485 U S at 242 250 (holding that the District



Court appropriately certified the class based on the preshysumption of reliance) But invoking the Basic presumpshytion does not actually prove that individual questions of reliance will not overwhelm the common questions in the case Basic still requires a showing that the individual investor bought or sold in reliance on the integrity of themarket price and crucially permits defendants to rebutthe presumption by producing evidence that individual plaintiffs do not meet that description See id at 249 (ldquoPetitioners could rebut the presumption of reliance as to plaintiffs who would have divested themselves oftheir Basic shares without relying on the integrity of themarketrdquo) Thus by its own terms Basic entitles defendshyants to ask each class member whether he traded in relishyance on the integrity of the market price That inquirylike the traditional reliance inquiry is inherently individshyualized questions about the trading strategies of individshyual investors will not generate ldquo lsquocommon answers apt todrive the resolution of the litigationrsquo rdquo Wal-Mart Stores supra at ___ (slip op at 10) See supra at 8ndash9 see also Cox 1736 n 55 (Basicrsquos recognition that defendants could rebut the presumption ldquoby proof the investor would have traded anyway appears to require individual inquiries intoreliancerdquo)

Basic thus exempts Rule 10bndash5 plaintiffs from Rule 23rsquos proof requirement Plaintiffs who invoke the presumptionof reliance are deemed to have shown predominance as amatter of law even though the resulting rebuttable preshysumption leaves individualized questions of reliance in the case and predominance still unproved Needless to saythat exemption was beyond the Basic Courtrsquos power to grant6

mdashmdashmdashmdashmdashmdash 6 The majority suggests that Basic squares with Comcast Corp v

Behrend 569 U S ___ (2013) and Wal-Mart Stores Inc v Dukes 564 U S ___ (2011) because it does not ldquorelieve plaintiffs of the burden of

13 Cite as 573 U S ____ (2014)


C It would be bad enough if Basic merely provided an endshy

run around Rule 23 But in practice the so-called ldquorebutshytable presumptionrdquo is largely irrebuttable

The Basic Court ostensibly afforded defendants anopportunity to rebut the presumption by providing evishydence that either aspect of a plaintiff rsquos fraud-on-theshymarket reliancemdashprice impact or reliance on the integrityof the market pricemdashis missing 485 U S at 248ndash249 As it turns out however the realities of class-action proceshydure make rebuttal based on an individual plaintiff rsquos lack of reliance virtually impossible At the class-certification stage rebuttal is only directed at the class representashytives which means that counsel only needs to find one class member who can withstand the challenge See Grundfest Damages and Reliance Under Section 10(b) of the Exchange Act 69 Bus Lawyer 307 362 (2014) After class certification courts have refused to allow defendants to challenge any plaintiff rsquos reliance on the integrity of the market price prior to a determination on classwide liabilshyity See Brief for Chamber of Commerce of the United States of America et al as Amici Curiae 13ndash14 (collecting cases rejecting postcertification attempts to rebut individshyual class membersrsquo reliance on price integrity as not pertishynent to classwide liability) One search for rebuttals on individual-reliance grounds turned up only six cases out ofthe thousands of Rule 10bndash5 actions brought since Basic Grundfest supra at 3607


proving predominancerdquo but ldquorather sets forth what they must prove to demonstrate such predominancerdquo Ante at 14ndash15 This argument misses the point Because Basic offers defendants a chance to rebut the presumption on individualized grounds the predicates that Basic sets forth as sufficient to invoke the presumption do not necessarily prove predominance

7 The absence of postcertification rebuttal is likely attributable inpart to the substantial in terrorem settlement pressures brought to bear



The apparent unavailability of this form of rebuttal hastroubling implications Because the presumption is conshyclusive in practice with respect to investorsrsquo reliance on price integrity even Basicrsquos watered-down reliance reshyquirement has been effectively eliminated Once the presumption attaches the reliance element is no longer an obstacle to prevailing on the claim even though manyclass members will not have transacted in reliance on price integrity see supra at 8ndash9 And without a func- tional reliance requirement the ldquoessential elementrdquo thatensures the plaintiff has actually been defrauded see Stoneridge 552 U S at 159 Rule 10bndash5 becomes the very ldquo lsquoscheme of investorrsquos insurancersquo rdquo the rebuttable presumpshytion was supposed to prevent See Basic supra at 252 (opinion of White J)8

For these reasons Basic should be overruled in favor of

the straightforward rule that ldquo[r]eliance by the plaintiff upon the defendantrsquos deceptive actsrdquomdashactual reliance not the fictional ldquofraud-on-the-marketrdquo versionmdashldquois an essenshytial element of the sect10(b) private cause of actionrdquo Stone-ridge 552 U S at 159 mdashmdashmdashmdashmdashmdash

by certification See eg Nagareda Class Certification in the Age of Aggregate Proof 84 N Y U L Rev 97 99 (2009) (ldquoWith vanishingly rare exception class certification sets the litigation on a path toward resshyolution by way of settlement not full-fledged testing of the plaintiffsrsquo caseby trialrdquo) see also Stoneridge Investment Partners LLC v Scientific-Atlanta Inc 552 U S 148 163 (2008) (ldquo[E]xtensive discovery andthe potential for uncertainty and disruption in a lawsuit allow plaintiffswith weak claims to extort settlements from innocent companiesrdquo)

8 Of course todayrsquos decision makes clear that a defendant may rebut the presumption by producing evidence that the misstatement at issue failed to affect the market price of the security see ante at 17ndash22 But both parts of Basicrsquos version of reliance are key to its fiction that an investor has ldquoindirectlyrdquo relied on the misstatement the unavailability of rebuttal with respect to one of those parts still functionally removes reliance as an element of proof

15 Cite as 573 U S ____ (2014)


III

Principles of stare decisis do not compel us to save Basicrsquos muddled logic and armchair economics We have not hesitated to overrule decisions when they are ldquounshyworkable or are badly reasonedrdquo Payne v Tennessee 501 U S 808 827 (1991) when ldquothe theoretical underpinnings of those decisions are called into serious questionrdquo State Oil Co v Khan 522 U S 3 21 (1997) when the decisions have become ldquoirreconcilablerdquo with intervening developshyments in ldquocompeting legal doctrines or policiesrdquo Patterson v McLean Credit Union 491 U S 164 173 (1989) orwhen they are otherwise ldquoa positive detriment to cohershyence and consistency in the lawrdquo ibid Just one of these circumstances can justify our correction of bad precedent Basic checks all the boxes

In support of its decision to preserve Basic the majority contends that stare decisis ldquohas lsquospecial forcersquo lsquoin respect to statutory interpretationrsquo because lsquoCongress remains free toalter what we have donersquo rdquo Ante at 12 (quoting John R Sand amp Gravel Co v United States 552 U S 130 139 (2008) some internal quotation marks omitted) But Basic of course has nothing to do with statutory interpreshytation The case concerned a judge-made evidentiary presumption for a judge-made element of the implied 10bminus5 private cause of action itself ldquoa judicial constructthat Congress did not enact in the text of the relevant statutesrdquo Stoneridge supra at 164 We have not afforded stare decisis ldquospecial forcerdquo outside the context of statu-tory interpretation see Michigan v Bay Mills Indian Community 572 U S ___ ___ n 6 (2014) (THOMAS J dissenting) (slip op at 15 n 6 and for good reason In statutory cases it is perhaps plausible that Congresswatches over its enactments and will step in to fix our mistakes so we may leave to Congress the judgmentwhether the interpretive question is better left ldquo lsquosettledrsquo rdquo or ldquo lsquosettled rightrsquo rdquo Square D Co v Niagara Frontier



Tariff Bureau Inc 476 U S 409 424 (1986) But this rationale is untenable when it comes to judge-made law like ldquoimpliedrdquo private causes of action which we retain a duty to superintend See eg Exxon Shipping Co v Baker 554 U S 471 507 (2008) (ldquo[T]he judiciary [cannot] wash its hands of a problem it created simply by callshying [the judicial doctrine] legislativerdquo) Thus when we err in areas of judge-made law we ought to presume that Congress expects us to correct our own mistakesmdashnot theother way around That duty is especially clear in the Rule 10bndash5 context where we have said that ldquo[t]he federalcourts have accepted and exercised the principal responsishybility for the continuing elaboration of the scope of the 10bndash5 right and the definition of the duties it imposesrdquo Musick Peeler amp Garrett v Employers Ins of Wausau 508 U S 286 292 (1993)

Basicrsquos presumption of reliance remains our mistake to correct Since Basic Congress has enacted two majorsecurities laws the Private Securities Litigation ReformAct of 1995 (PSLRA) 109 Stat 737 and the Securities Litigation Uniform Standards Act of 1998 (SLUSA) 112Stat 3227 The PSLRA ldquosought to combat perceivedabuses in securities litigationrdquo ante at 15 and SLUSA prevented plaintiffs from avoiding the PSLRArsquos reshystrictions by bringing class actions in state court ibid Neither of these Acts touched the reliance element of the implied Rule 10bndash5 private cause of action or the Basic presumption

Contrary to respondentrsquos argument (the majority wisely skips this next line of defense) we cannot draw fromCongressrsquo silence on this matter an inference that Conshygress approved of Basic To begin with it is inappropriate to give weight to ldquoCongressrsquo unenacted opinionrdquo when construing judge-made doctrines because doing so allows the Court to create law and then ldquoeffectively codif[y]rdquo itldquobased only on Congressrsquo failure to address itrdquo Bay Mills

17 Cite as 573 U S ____ (2014)


supra at ___ (THOMAS J dissenting) (slip op at 14)Our Constitution however demands that laws be passed by Congress and signed by the President U S Const Art I sect7 Adherence to Basic based on congressionalinaction would invert that requirement by insulating errorfrom correction merely because Congress failed to pass a law on the subject Cf Patterson supra at 175 n 1 (ldquoCongressional inaction cannot amend a duly enacted statuterdquo)

At any rate arguments from legislative inaction arespeculative at best ldquo[I]t is lsquo ldquoimpossible to assert with anydegree of assurance that congressional failure to act repshyresentsrdquo affirmative congressional approval of rsquo one of this Courtrsquos decisionsrdquo Bay Mills supra at ___ (THOMAS J dissenting) (slip op at 13) (quoting Patterson supra at 175 n 1) ldquo lsquoCongressional inaction lacks persuasive significancersquordquo because it is indeterminate ldquo lsquoseveral equallytenable inferences may be drawn from such inactionrsquo rdquo Central Bank of Denver N A v First Interstate Bank of Denver N A 511 U S 164 187 (1994) (quoting Pension Benefit Guaranty Corporation v LTV Corp 496 U S 633 650 (1990)) Therefore ldquo[i]t does not follow that Conshygressrsquo failure to overturn a precedent is reason for this Court to adhere to itrdquo Patterson supra at 175 n 1

That is especially true here because Congress passed a law to tell us not to draw any inference from its inactionThe PSLRA expressly states that ldquo[n]othing in this Act shall be deemed to create or ratify any implied private right of actionrdquo Notes following 15 U S C sect78jndash1 p 430If the Act did not ratify even the Rule 10bndash5 private cause of action it cannot be read to ratify sub silentio the preshysumption of reliance this Court affixed to that actionFurther the PSLRA and SLUSA operate to curtail abusesof various private causes of action under our securities lawsmdashhardly an indication that Congress approved of Basicrsquos expansion of the 10bndash5 private cause of action



Congressrsquo failure to overturn Basic does not permit us toldquoplace on the shoulders of Congress the burden of theCourtrsquos own errorrdquo Girouard v United States 328 U S 61 70 (1946)

Basic took an implied cause of action and grafted on a

policy-driven presumption of reliance based on nascent economic theory and personal intuitions about investment behavior The result was an unrecognizably broad causeof action ready made for class certification Time and experience have pointed up the error of that decisionmaking it all too clear that the Courtrsquos attempt to revisesecurities law to fit the alleged ldquonew realities of financial marketsrdquo should have been left to Congress 485 U S at 255 (opinion of White J)

3$0317z

3$0317R

3$0317P

3$0317N


Syllabus

had rebutted the Basic presumption And without the benefit of that presumption investors would have to prove reliance on an individual basis meaning that individual issues would predominate over com-mon ones and class certification would be inappropriate under Fed-eral Rule of Civil Procedure 23(b)(3) The District Court rejected Hal-liburtonrsquos argument and certified the class The Fifth Circuit affirmed concluding that Halliburton could use its price impact evi-dence to rebut the Basic presumption only at trial not at the class certification stage

Held 1 Halliburton has not shown a ldquospecial justificationrdquo Dickerson v

United States 530 U S 428 443 for overruling Basicrsquos presumptionof reliance Pp 4ndash16

(a) To recover damages under section 10(b) and Rule 10bndash5 aplaintiff must prove as relevant here ldquo lsquoreliance upon the misrepre-sentation or omissionrsquo rdquo Amgen Inc v Connecticut Retirement Plans and Trust Funds 568 U S ___ ___ The Court recognized in Basic however that requiring direct proof of reliance from every individualplaintiff ldquowould place an unnecessarily unrealistic evidentiary bur-den on the plaintiff who has traded on an impersonal marketrdquo 485 U S at 245 and ldquoeffectively wouldrdquo prevent plaintiffs ldquofrom pro-ceeding with a class actionrdquo in Rule 10bndash5 suits id at 242 To ad-dress these concerns the Court held that plaintiffs could satisfy thereliance element of a Rule 10bndash5 action by invoking a rebuttable pre-sumption of reliance The Court based that presumption on what is known as the ldquofraud-on-the-marketrdquo theory which holds that ldquothemarket price of shares traded on well-developed markets reflects allpublicly available information and hence any material misrepre-sentationsrdquo Id at 246 The Court also noted that the typical ldquoinves-tor who buys or sells stock at the price set by the market does so inreliance on the integrity of that pricerdquo Id at 247 As a result whenever an investor buys or sells stock at the market price his ldquore-liance on any public material misrepresentations may be pre-sumed for purposes of a Rule 10bndash5 actionrdquo Id at 247 Basic also emphasized that the presumption of reliance was rebuttable rather than conclusive Pp 5ndash7

(b) None of Halliburtonrsquos arguments for overruling Basic so dis-credit the decision as to constitute a ldquospecial justificationrdquo Pp 7ndash12

(1) Halliburton first argues that the Basic presumption is in-consistent with Congressrsquos intent in passing the 1934 Exchange Actmdashthe same argument made by the dissenting Justices in Basic The Basic majority did not find that argument persuasive then and Hal-liburton has given no new reason to endorse it now Pp 7ndash8

(2) Halliburton also contends that Basic rested on two premis-

3 Cite as 573 U S ____ (2014)

Syllabus





Syllabus




5 Cite as 573 U S ____ (2014)

Syllabus




_________________

_________________

1 Cite as 573 U S ____ (2014)




No 13ndash317



[June 23 2014]










3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)












7 Cite as 573 U S ____ (2014)















9 Cite as 573 U S ____ (2014)









11 Cite as 573 U S ____ (2014)











13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N

3 Cite as 573 U S ____ (2014)

Syllabus





Syllabus




5 Cite as 573 U S ____ (2014)

Syllabus




_________________

_________________

1 Cite as 573 U S ____ (2014)




No 13ndash317



[June 23 2014]










3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)












7 Cite as 573 U S ____ (2014)















9 Cite as 573 U S ____ (2014)









11 Cite as 573 U S ____ (2014)











13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N


Syllabus




5 Cite as 573 U S ____ (2014)

Syllabus




_________________

_________________

1 Cite as 573 U S ____ (2014)




No 13ndash317



[June 23 2014]










3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)












7 Cite as 573 U S ____ (2014)















9 Cite as 573 U S ____ (2014)









11 Cite as 573 U S ____ (2014)











13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N

5 Cite as 573 U S ____ (2014)

Syllabus




_________________

_________________

1 Cite as 573 U S ____ (2014)




No 13ndash317



[June 23 2014]










3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)












7 Cite as 573 U S ____ (2014)















9 Cite as 573 U S ____ (2014)









11 Cite as 573 U S ____ (2014)











13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N

_________________

_________________

1 Cite as 573 U S ____ (2014)




No 13ndash317



[June 23 2014]










3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)












7 Cite as 573 U S ____ (2014)















9 Cite as 573 U S ____ (2014)









11 Cite as 573 U S ____ (2014)











13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N







3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)












7 Cite as 573 U S ____ (2014)















9 Cite as 573 U S ____ (2014)









11 Cite as 573 U S ____ (2014)











13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N








5 Cite as 573 U S ____ (2014)












7 Cite as 573 U S ____ (2014)















9 Cite as 573 U S ____ (2014)









11 Cite as 573 U S ____ (2014)











13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N







7 Cite as 573 U S ____ (2014)















9 Cite as 573 U S ____ (2014)









11 Cite as 573 U S ____ (2014)











13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N








9 Cite as 573 U S ____ (2014)









11 Cite as 573 U S ____ (2014)











13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N





11 Cite as 573 U S ____ (2014)











13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N







13 Cite as 573 U S ____ (2014)











15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N







15 Cite as 573 U S ____ (2014)












17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N








17 Cite as 573 U S ____ (2014)















19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N










19 Cite as 573 U S ____ (2014)











21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N






21 Cite as 573 U S ____ (2014)












23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N







23 Cite as 573 U S ____ (2014)






It is so ordered

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]



_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N

_________________

_________________

1 Cite as 573 U S ____ (2014)



No 13ndash317



[June 23 2014]












3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N









3 Cite as 573 U S ____ (2014)












5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N









5 Cite as 573 U S ____ (2014)

















7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N









7 Cite as 573 U S ____ (2014)












9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N






9 Cite as 573 U S ____ (2014)












11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N








11 Cite as 573 U S ____ (2014)












13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N







13 Cite as 573 U S ____ (2014)















15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N








15 Cite as 573 U S ____ (2014)


III








17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N






17 Cite as 573 U S ____ (2014)










3$0317z

3$0317R

3$0317P

3$0317N






3$0317z

3$0317R

3$0317P

3$0317N

halliburton co. v. erica p. john fund - supreme court of the united states · 2 halliburton co. v....

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